the government bond yields (1)

Global and Regional Market Developments (May 2020)

Imbal hasil obligasi (Bond yields) berbeda di negara berkembang Asia Timur di tengah berlanjutnya keberanian ambil risiko yang lemah dan prospek ekonomi yang suram. Antara 28 Februari dan 29 Mei, sentimen investasi global tetap lemah baik di pasar negara maju maupun negara berkembang.

The yields on 2-year local currency government bonds fell in the United Kingdom (UK) and the United States (US), as well as in most emerging East Asian markets where policy rates have recently been adjusted.1 The yields on 10-year government bonds posted a mixed picture, reflecting the respective fundamentals of individual economies. The weak economic outlook and uncertain progress in fighting the coronavirus disease (COVID-19) has cast a shadow on global financial conditions.

Changes in Global Financial Conditions

Di negara berkembang Asia Timur, the 2-year government bond yield turun di sebagian besar pasar antara 28 Februari dan 29 Mei, sementara pergerakan 10-year bond yields berbeda. Penurunan 2-year bond yields sebagian besar didorong oleh langkah-langkah kebijakan moneter bank sentral, termasuk menurunkan suku bunga dan menyesuaikan reserve requirement ratios atau  Giro Wajib Minimum (GWM). The 2-year bond turun paling tajam di Filipina dan Singapura, masing-masing turun 133 basis poin (bps) dan 103 bps.

Both markets also saw declines in their 10-year yields during the review period. The Bangko Sentral ng Pilipinas has been one of the most aggressive central banks in the region in terms of easing monetary policy, reducing policy rates by 125 bps and the reserve requirement ratio by 200 bps year-to-date through 31 May. The People’s Republic of China (PRC); Malaysia; and Hong Kong, China also recorded declines in their 2-year and 10-year yields but to a lesser extent.

The PRC reduced a number of key interest rates during the review period. On 29 March, the rate on the 7-day repurchase rate was lowered by 20 bps to 2.20%. The rate on the medium-term lending facility was lowered by 20 bps to 2.95% on 15 April, and the rate on the 1-year loan prime rate was cut by 20 bps to 3.85% on 19 April. Malaysia also cut its overnight policy rate by a cumulative 100 bps from 1 January through 31 May. The Republic of Korea, Thailand, and Viet Nam saw declines in their 2-year yields and increases in their 10-year yields during the review period. Gains in yields at the longer-end of the curve were mostly driven by investor concerns over government finances and an expanded bond supply in the wake of COVID-19. In Thailand, the government passed its largest COVID-19 stimulus package to date on 31 May, which was valued at THB1.9 trillion.

Indonesia was the sole exception to the regional trend, with 2-year and 10-year yields increasing by 83 bps and 40 bps, respectively. The uptick in yields in Indonesia was largely driven by a market sell-off as foreign investors dumped government bonds amid heightened global market uncertainties due to the COVID-19 outbreak. Investors had also been expecting additional rate cuts in April and May that did not materialize.

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